Everyone - including me - thought that Google must be losing a boatload of money on YouTube based on bandwidth costs alone. But what if that bandwidth was essentially free?

the lack of a monthly bill in the mailbox doesn't mean Google's internet connection is free — it's just that it has purchased unused fiber optic cable known as "dark fiber" — and uses it to carry its traffic to other networks where it "peers" or trades traffic with other ISPs. Its costs for bandwidth are then amortized across the life of its fiber and routers.

That means that the ads Google runs - text, pre/post roll, etc - that makes YouTube cash flow positive or profitable. It also means that anything being proposed that might muck with the way peering agreements work now is going to find Google in opposition...

Technorati Tags: youtube, google, peering